What to do when you have access to inside news?
- Thread starter qll
- Start date
I was wondering the same. Let's say I am at a baseball game and 2 guys behind me discussing a company. Unknown to me they can be insiders, they sure sound knowledgable. Now if I think what they say is sound and act on it, I don't think I could be prosecuted for it.
By the way Riskarb, you are a Snitch....
for example, i read the news that a company is offering to take a public company to private in a local newspaper. the public company rejected the offer and never released this to the public. the offer price is 50% more than the market price. i bought the stock based on the news shooting for 30%, but left with 10% profit. what i did was totally legal.
another case is how to calculate the traffics to yahoo and profit from ebay. you can use a lot of public information not used by investors to calculate to find the earnings.
What do you think Country Clubs are for - to pass insider info around while you pass gas in the stalls 
I think alot of this depends on how you are receiving this information. For instance, let's assume you have a personal relationship with a corporate insider, who has now tipped you on what the earnings are going to be. If you make a trade you are probably going to be guilty of insider trading.
But let's say you have no relationship with any corporate insider. Let's say instead that you overheard someone talking about the earnings in a locker room at the golf club. I think this is a different issue.
Now here's the problem: if you are ever charged and convicted of insider trading, you're going away to the big house. Insider trading is very murky, as to what is and what isn't. Asking this type of question on the internet is really stupid. Assuming you are serious and do make a trade, now you've left a possible trail. But further, why would you expect any particular expertise on a newsgroup of this type?
It's all in the details. Every trade made on insider information is not necessarily insider trading. It depends. But even if you are charged, and win, you lose in all probablility because of the legal fees. So you are truly interested you should speak with a lawyer regarding all the details of this situation.
That said, I'm always amused by "insider information". There are people who are pretty good about "guessing" earnings ahead of time. So what? The fact that you know the earnings doesn't mean you will profit from said knowledge. I suppose you've seen a stock beat the expectations and trade down sharply anyway? It's one thing to have the information ahead of time....it's another to know what the market will make of the information.
OldTrader
EDIT: By the way, I use "maybe", "possible", etc throughout this post because the insider trading laws are very murky. Alot of what happens in insider trading has to do with the details, case law, etc.
OldTrader,
i agree with you that even i know the earnings, i still won't be sure 100% which way the market will react. if i open a lot of positions, it will be difficult to close them. if the market goes against me and i am heavily on margins, it will wipe me out. good stock at bad time happens all the time.
i agree with you that even i know the earnings, i still won't be sure 100% which way the market will react. if i open a lot of positions, it will be difficult to close them. if the market goes against me and i am heavily on margins, it will wipe me out. good stock at bad time happens all the time.
What happens if you short a company for an earnings report, based upon a "recommendation" by a fellow ET poster? Say you've never traded the stock before, but since a certain person here has a pretty impressive record, you just short it based on his call, and it tanks big. Does this still raise red flags?